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Saturday, March 20, 2010

Actuarial science

I only have one comment on the health insurance act pending in congress.

All insurance companies use essentially the same actuarial algorithm to analyze risk. This gets based on years of data from a large population of patients. Since no real technical competition exists between companies, they can very clearly only compete on how well they can subtly rip-off their customers. And if they did offer better risk analysis, it could only involve getting better data from their customers. But not all customers would willingly provide info on risky behavior or potentially preconditional or pre-existing illnesses. In other words, custumers lie and won't give out information to a for-profit company.

So who better to provide a single optimal algorithm, pool resources, and get good data from their people? A government insurance company. Single payer remains the obvious answer. I can't even argue this futher because that would involve having an indoctrinated wingnut in the room.


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